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Treasury Rule Change Protects ‘Dark Money’ Donors

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The U.S. Treasury said Monday that it will no longer require certain tax-exempt organizations to identify their donors to the IRS. The policy change will free labor unions and other groups, including issue advocacy organizations and politically active nonprofits, from having to disclose to the IRS the identities of “dark money” contributors who give more than $5,000. The groups affected include the U.S. Chamber of Commerce, an arm of the National Rifle Association, Planned Parenthood and the Koch-backed Americans for Prosperity.

“Americans shouldn’t be required to send the IRS information that it doesn’t need to effectively enforce our tax laws, and the IRS simply does not need tax returns with donor names and addresses to do its job in this area,” said Treasury Secretary Steven Mnuchin.

Charities and political groups will still have to provide the names and addresses of their donors, but the Treasury Department said that the change will better protect the privacy of the donors to other nonprofits and prevent their information from being misused or leaked.

The new policy “will save both private and government resources,” Treasury said, because the nonprofit groups will be able to avoid extra paperwork and the IRS will no longer have to redact donor names and addresses before making tax filings public. The nonprofits will still have to keep a record of their donors and make it available to the IRS for audits.

Conservatives, who had long sought the change, say it represents a victory for free speech and will prevent the IRS from targeting organizations for their political leanings. Critics say it could open the door for the organizations involved to hide illegal foreign contributions and will increase the political power of anonymous “dark money” donors. Sen. Ron Wyden (D-OR), the ranking Democrat on the Senate Finance Committee, said Tuesday that he will vote against President Trump's pick to head the IRS, Charles Rettig, unless he commits to reverse the change.

The Senate Finance Committee is scheduled to vote on Rettig's nomination on Thursday.

As editor in chief, Yuval Rosenberg oversees all aspects of The Fiscal Times' website and email newsletter. His writing has appeared in publications including BusinessWeek, CNBC.com, CNNMoney.com, Fast Company, Fortune, Newsweek, Money and Time.